Master Blaster, Inc., sells and installs audio equipment. Master Blaster, Inc.\'

Question

Master Blaster, Inc., sells and installs audio equipment. Master Blaster, Inc.'s entire inventory was destroyed during a recent fire that occurred at its warehouse. Master Blaster, Inc.'s accounting records reflect the following information. (Click the icon to view the accounting records.) Requirement 1. Use the gross profit method to estimate the amount of Master Blaster, Inc.'s inventory loss Data Table Begin by calculating the cost of goods available and then compute the estimated cost of the inventory los Beginning inventory... . Net purchases Net sales Gross profit rate $ 63,000 243,900 404,000 30% Cost of goods available Print Done

Explanation / Answer

Gross profit = 30% of sales

Cost of goods sold = 70% of sales

= $404,000 * 70%

= $282,800

Master Blaster, Inc's inventory loss = $24,100

Beginning inventory $63,000 Add : Cost of goods purchased $243,900 Cost of goods available for sale $306,900 Less : Ending inventory (plug) $24,100 Cost of goods sold $282,800

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